Highlights
- The FTC is likely to halt its trial with Microsoft over the Activision Blizzard acquisition to pursue settlement talks, following lawmaker pressure.
- The FTC's federal court defeat is seen as a major blow to its efforts to block the deal, allowing Microsoft to potentially proceed without explicit approval.
- Settlement talks between Microsoft and the FTC could be expedient, and the regulator's pause in the administrative case suggests a willingness to negotiate concessions.
The Federal Trade Commission is likely to pause its in-house trial with Microsoft over the tech giant's acquisition of Activision Blizzard in a bid to pursue settlement talks, according to a new report. This change of heart coincides with the increasing lawmaker pressure on the FTC to stop opposing Microsoft's Activision Blizzard deal.
Following a week-long hearing in late June, the Ninth Circuit Court of Appeals denied the FTC's attempt to block Microsoft's Activision Blizzard acquisition on July 14. While the regulator is still pursuing an in-house trial over the acquisition, its federal court defeat was widely interpreted as a fatal blow to its chances of actually preventing the deal from going through.
The FTC has now suspended an administrative challenge to the deal that was scheduled for an in-house trial in August, Bloomberg reports, citing regulatory filings. This turn of events opens the doors for settlement talks between Microsoft and the FTC. In the meantime, the agency is still appealing the federal court ruling approving the deal, but seeing how its preliminary injunction request has been denied, Microsoft could ostensibly close the acquisition without the FTC's explicit approval. Given that state of affairs, the regulator's decision to pause its administrative case against the $68.7 billion acquisition could be interpreted as a signal that the FTC is now open to negotiating concessions from Microsoft instead of continuing to outright oppose the deal.
Assuming settlement talks are truly on the horizon, such discussions are likely to be fairly expedient, not least because Microsoft already missed its original July 18 deadline for closing the deal. In response to that development, Microsoft and Activision Blizzard agreed to extend the acquisition deadline by another three months earlier this week.
In exchange for its continued cooperation, the Call of Duty maker managed to raise the previously agreed $3 billion termination fee by another $500 million. Additionally, should the deal be terminated after September 15, the breakup fee that Microsoft will have to pay to Activision Blizzard will rise to $4.5 billion. For added context, that sum dwarfs Activision Blizzard's most successful year on record, which was 2021, when the company reported $3.16 billion in profit.
Besides the FTC's challenge, the acquisition is currently still facing regulatory pushback from the British Competition and Markets Authority. Microsoft already appealed the UK's rejection of the Activision Blizzard deal in late May, with the final decision in those proceedings being expected to arrive by the end of summer.
Source: Bloomberg